WIREDGOV

Brief introduction

This study by the Centre for Economics and Business Research (Cebr) concludes that, not only has the effective application of quality management (QM) procedures already contributed to past UK business and economic successes and that it will continue to do so in the future, but that it could well provide an important foundation on which future business and institutional success could be built. Such success is vital to the task of returning the UK to positive economic growth.

At the request of the Chartered Quality Institute (CQI) the Cebr has investigated the economic impact of QM programmes, through its effects on the productivity and success of organisations in the private, public and voluntary sectors. The fruits of our lengthy investigation are contained within the pages of this report, and summarised in this preamble. Our investigations were carried out in accordance with the study’s twin research aims to, firstly, demonstrate and quantify the extent to which more effective, intensive and longer-term use of QM systems and techniques create more productive and successful organisations and secondly, to show how this translates into positive effects on headline economic indicators.

Key conclusions of the report

Overall, Cebr’s investigations of QM in the UK economy point to three broad conclusions:
i. Insofar as they have been implemented by organisations in the different sectors of the economy, QM systems have already contributed substantially to the success of those organisations, judged against a wide array of metrics. Return on investment (RoI) data support this conclusion, indicating that businesses can typically expect to make more from their QM systems than they spend implementing them.

ii. Via their impact on organisations’ outcomes, QM systems have, in aggregate, proven themselves important contributors to the health of the UK macroeconomy. In other words, QM programmes have already improved UK macroeconomic outcomes significantly.

iii. If QM programmes were instituted more widely by organisations in all sectors of the economy, these desirable effects would become even more pronounced, to the benefit of both the organisations individually and to the UK economy as a whole. RoI data, estimated from a series of in-depth interviews, support this conclusion. Across a number interview respondents, the data indicated an average Revenue RoI of 6:1, i.e. for every £1 spent on a QM programme, revenues were increased by £6. They also indicated an average Cost RoI of 16:1. This implies that for every £1 spent on a QM programme, costs were reduced by £16. One case study respondent’s data yielded a Profit RoI of 3:1, implying that for every £1 spent on QM, profits increased by £3. Finally, one interview respondent, a quality excellence body, reported that across 830 business services firms, investing in QM programmes had reduced costs by £18 for every £1 spent. These impressive RoI findings indicate that if QM programmes were instituted more widely, businesses would stand to benefit from net reductions in costs and net increases in revenues and profits.

These three conclusions are the final product of the combination of primary and secondary data inputs provided through case studies (based on in-depth interviews), a survey of 120 organisations, and a review of the literature on business and economic effects of QM.

These three sources were generally coherent with each other. Because they were independent their coherency indicates that the information they yielded is correct. That is, it is unlikely that three independent data sources would all be incorrect in similar ways. This means that Cebr has every confidence in the three broad conclusions stated above.

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